The following information was extracted from the records of James Bond, a sole trader, who operates a
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Question:
The following information was extracted from the records of James Bond, a sole trader, who operates a Manufacturing business. His financial year-end is December 31.
Stocks at 1 January 2020
- Raw Materials $78,000
- Work in progress 18,000
- Finished Goods 74,000
- Purchases of raw materials 910,000
- Carriage on raw materials 7,000
- Direct Labour 440,000
- Indirect Factory Wages 67,000
- Factory engineering costs 36,000
- Factory manager's salary 54,000
- Sales 2,420,000
- Factory Insurance 48,000
- Factory power 89,000
- Fixed assets:
- Buildings at cost 4,400,000
- Machinery at cost 900,000
- Office Equipment at cost 210,000
- Miscellaneous expense 76,000
- Office Salaries 38,000
- Selling and distribution expenses 99,000
- Stocks at 31 December 2020:
- Raw materials 24,000
- Work in progress 40,500
- Finished goods 126,000
- Additional information at 31 December 2020:
- a) The miscellaneous expense should be shared: Factory 1/5 and Administration 4/5
- b) Indirect factory Wages prepaid amounted to $19,000.
- c) Factory insurance outstanding amounted to $9200.
- d) Depreciate Machinery at 12% per annum on cost and Office Equipment at 20% per annum on cost.
- REQUIRED:
- a) Prepare the Manufacturing Account and Income Statement for the year ended 31 December 2015
- b) Differentiate between direct costs and overhead costs
Related Book For
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
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